The real Bitcoin Satoshi Nakamoto

The latest Bitcoin bombshell — distracting us even from the Mt.Gox failure — was the Newsweek cover story — their first printed issue since 2012 — declaring they had found the mythical creator of Bitcoin, known under the pseudonym of Satoshi Nakamoto, and he was a guy from near L.A. in his 60s whose real birth name was actually Satoshi Nakamoto.

Now known as Dorian S. Nakamoto, I’ll refer to him as DSN to distinguish him from BCSN — the Bitcoin creator Satoshi Nakamoto, though of course the question is whether DSN == BCSN. DSN denies he is BCSN and says his quotes suggesting that were answers to other questions, at least in his mind.

The second surprise was a web posting from BCSN, the first in years, simply saying he is not DSN. This posting is confusing, because a little thought shows it reveals no information on that subject. If DSN is BCSN, then of course both are denying it. More to the point, BCSN is clearly somebody well versed in game theory and trust calculus, and knows very well that the denial does not add reliable information on this.

BCSN’s post does tell us one big thing though — that BCSN is still alive, around, and even willing to comment if the issue is as big as this one. Many speculated that his silence meant he was gone, and also that he had lost his estimated million bitcoins.

The Bitcoin community was quite skeptical of the Newsweek claim. One very justified reason for this skepticism is that aside from the two key disputed quotes, the article’s arguments that it has found BCSN read like nonsense to the average nerd.

DSN might be BCSN, the article reasons, because he is a nerdy engineer with good technical skills, a background working at various tech companies and government projects, is aloof from his family and neighbours, and enjoys a technical hobby such as collecting model trains, even machining his own parts. “Smart, intelligent, mathematics, engineering, computers. You name it, he can do it,” says DSN’s brother. He’s a little bit libertarian, looks scruffy and is reportedly a bit of an asshole.

Aha, links Leah McGrath Goodman of Newsweek — this “suggested I was on the right track.”

What she doesn’t realize perhaps is that I literally know hundreds people who fit that description. It’s a profile that is actually more likely to be true than not among wide swaths of the nerd community.

Goodman’s logic reads to us like somebody saying, “I was on the track of the Zodiac killer, whom we know to be from San Francisco. I identified a suspect named John Zodiac who is a quiet loner, and is known to like the San Francisco Giants and burritos in the Mission district. I’m on the right track!”

There is only one thing in the Newsweek article that was worthy of attention. With police he summoned ready to usher Goodman away from his house, he tells her

“I am no longer involved in that and I cannot discuss it. It’s been turned over to other people. They are in charge of it now. I no longer have any connection.”

In the context of Bitcoin, that’s indeed proof enough. The police officers present have confirmed he did say something like this. DSN insists he felt he was being asked about his past classified work on government projects. He says he had not even heard about Bitcoin until this matter came up.

Various online forces have come up with other arguments against the match. DSN’s known writings seem fairly different from the writings of BCSN, though Goodman finds a few commonalities, including hints that BCSN is perhaps older (like DSN.)

But most of all, BCSN is known as a scrupulous protector of his or her or their own identity. BCSN made meticulous use of online identity hiding techniques to avoid being tracked, and has never spent any of the huge cache of bitcoins mined in the early days, possibly to avoid the risk of detection. This is so completely at odds with the idea of doing it all under his real name that after a perfunctory search in the early days, most people who fancied themselves Satoshi-finding detectives rarely bothered to look at people whose real name was Satoshi Nakamoto. Common wisdom, in fact, was that he/she probably wasn’t even Japanese. Certainly not somebody with no history in the cryptography or digital money communities.

But what if it is him?

While currently the tide seems to be to discredit the Newsweek story, a second question has been raised — is it good or bad if BCSN is unmasked, and if it is this guy?

Almost everybody believes it is a bad thing to unmask BTSN against his will, and that he deserves his privacy. The Bitcoin community is highly focused on privacy, after all.

Some think that the mystique of the unknown creator has been good for Bitcoin, adding to its allure. It’s also good to show how it’s a community effort, owned by no one, with that creator (probably) no longer exerting any influence. If Bitcoin had a clear founder and leader, that person would be sort of a central point of failure, at odds with the philosophy of Bitcoin design.

I tend to think the other way. I believe that to the mainstream financial and governmental worlds, the idea that Bitcoin was created by a mysterious unknown party is a reason to be dismissive or suspicious of it. Because it could have been created by anyone, you can imagine it was created by the NSA, or Chinese spies, or anarchists or others you fear or don’t trust. While motives have been expressed, the real motives of the creators remain an open question to this world. The idea of a system that nobody owns is still a very strange concept in these worlds.

I think it would be good for the currency if it became revealed that BCSN was a brilliant but typical lone programmer who no longer was exercising much influence over the course of Bitcoin. I think the mainstream world would trust it more. Even better if BCSN took my advice and started donating the coins he can never spend to charity to demonstrate that the creator was not just in it to make a killing. (I don’t think he was, and few in the Bitcoin community think that as well, but outsiders, hearing about his cache, might well imagine it.)

A Sudden Unmasking and money inheritance

The sudden unmasking brought up another serious issue. If this was BCSN, how has he stored the keys for his million bitcoins? If the keys are stored at his house, or people imagine that they are stored there, the publication of his address might trigger attempts to steal them, digitally or physically. If they are stored there, BCSN is smart enough to encrypt them, but not good enough to resist “rubber hose” cryptanalysis, where physical torture is used to extract keys.

And if they are encrypted, it’s worth noting that since none of DSN’s relatives had any suspicion he was involved in Bitcoin, whenever he dies, the keys will be lost with him and not passed to his heirs. BCSN is probably smart, and has his keys stored on special paper wallets and other forms, distributed in multiple safety deposit boxes. (There are techniques where you can split keys up into parts, so that you need to gather a majority of the parts, but not all of them, to recover the keys. This means even corrupt banks can’t get them, but that you or your heirs will be able to recover them.)

One hopes BCSN knows how to use these techniques and store his/her keys safely and in a way that his/her heirs can get them. But I’m pretty sure that most holders of bitcoins probably haven’t done this. Most probably have their coins in exchanges, and are vulnerable to thinks like the fall of Mt.Gox if they pick the wrong one.